Rita could be “national disaster” for U.S. crude oil production

Greehey said in a Tuesday night interview, that if the hurricane damages the refineries, refiners will be short of refining capacity. It will lead to raising gasoline prices well over $3.00 a gallon at the pump.

Valero became the largest U.S. refiner earlier this year when it completed the purchase of Premcor Inc. Valero operates refineries in Port Arthur, Houston, Texas City and Corpus Christi, Texas - all potentially in the path of Hurricane Rita.

"It's going to be coming across the (U.S.) Gulf (of Mexico)," Greehey said. "There's a lot of oil platforms, oil rigs, (natural) gas platforms, gas rigs. It could have a significant impact on supply and prices, and then, depending on what it does to the refineries, there are still four refineries that are shut down. So this really is a national disaster."

Refineries in Houston and Texas City process 2.3 million barrels of crude oil or 13.5 percent of daily U.S. refining capacity. The Beaumont-Port Arthur, Texas, refineries account for another 1.1 million barrels in refining capacity, Reuters reports.

Based on Rita's current forecast path Texas City, Houston, Port Arthur and Beaumont could be lashed by high winds and heavy rains from Rita's northeast quadrant, which often packs the highest winds in a hurricane.

Valero announced on Wednesday morning it would reduce production at its Houston and Texas City refineries to prepare for the hurricane.